Texas' Perry rejects stimulus for expanded jobless benefits

In announcing that he won't accept $550 million for expanded unemployment benefits as part of the federal stimulus package, Gov. Rick Perry said he didn't want Washington politicians pushing their values on Texas. He's the second governor to reject part of the stimulus money — but some state legislators have vowed to try to overturn his rejection.

AUSTIN — Gov. Rick Perry announced Thursday that he will block Texas from accepting $550 million for expanded unemployment benefits as part of the federal stimulus package.

"Again and again, we hear the purpose of the federal stimulus legislation is to create jobs but this portion will actually slow job creation," Perry said at a news conference in the middle of Bering's Hardware in Houston.

Framing his decision as a stand for state sovereignty, Perry said Washington politicians are trying to push their values on the Texas government.

"If Washington really wanted to help, wanted to respect our rights as a state, they would send money from the Federal Unemployment Account with no strings attached just like they did in 2002," Perry said.

Perry has signaled for weeks he was uncomfortable with taking parts of the stimulus money that would amount to increasing the state's social services net, which the state would have to continue funding once the stimulus money ran out.

Several state lawmakers have said they would arrange a vote to override Perry if he didn't accept all the stimulus money due Texas.

Democrat James Clyburn, majority whip in the U.S. House of Representatives, placed a clause in the $787 billion stimulus bill that enables state legislatures to bypass governors who reject the money.

Perry touted Texas' economy, relatively strong compared to the rest of the country, as proof that the federal government shouldn't be telling him how to govern in an economic crisis.

"I would tell my friends in Washington that if they want a blueprint for how to get the economy back on track, look at Texas," Perry said.

Perry predicted that the ramifications of increasing the unemployment insurance coverage in Texas would be huge, starting with increasing the tax burden of business owners, who would then reduce their hiring and raise the price of their products, hurting consumers around the state.

"During these tough times, Texas employers are working harder than ever to move products, to make payroll, to create jobs," Perry said. "The last thing they need right now is for government to burden them with higher taxes."

Perry was a day late in being the first governor to reject stimulus money. On Wednesday, South Carolina Gov. Mark Sanford passed on $700 million in stimulus cash, saying that it would harm his state’s residents in the long run by increasing the federal budget deficit and building expectations for government programs that can’t be sustained. That state's legislature is expected to make sure the state gets the money anyway, making Sanford's move largely symbolic.

Reaction to Perry's announcement came quickly.

Fort Worth State Rep. Marc Veasey charged Perry with putting ideology over the needs of Texans like those recently laid off from Alcon Labs in Fort Worth.

"Our state deserves a governor that recognizes the struggle these families face," Veasey said. "It is time for the Legislature to do the right thing, and circumvent Governor Perry’s obstruction, so that we can provide the relief and stimulus the Texas economy needs.”

Meanwhile, the Texas chapter of the National Federation of Independent Businesses saluted Perry's decision.

"Small business is not asking for federal bailouts, but we are requesting that government at all levels free the hand of Texas entrepreneurs and let small business lead Texas and the nation out of the current economic malaise," Executive Director Will Newton said.